The U.S. market remains in an Uptrend Under Pressure. The S&P 500 declined 37bps on a higher d/d volume and recorded its sixth
distribution day. It has support at its 21-DMA (4,727) and is retesting 52-week highs (4,793). The Nasdaq avoided a distribution day and
continues to consolidate above its 21-DMA support (14,786). The distribution day count now stands at six and three, respectively.
Author: Deepashree MC
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
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European markets closed flat last week, but distribution increased among major indices. As weakness persists this week, on the back of increasing doubts regarding the timing of rate cuts, the index breached its 21-DMA today for the first time since it started its uptrend in November. We recommend trimming positions in extended names. Next support for the index is at its rising 50-DMA, 1.4% below.
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Last week, sectors were mixed. Capital Equipment and Technology logged the best gain, while Energy led the decline. On our rotation graph, Capital Equipment, Health Care, and Transportation are showing improvement in short-term momentum. Energy, Retail, and Utility are showing a decline in their short-term momentum.
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Sector Score Cards – Stocks of Interest: Best-rated names trading at a buy point include SAAB (SAAB.SE), Ipsos (IPS.FR), Hochtief (HOTX.DE), Sodexo (SDX.FR) and Indra Sistemas (IDR.ES) – Please refer from page 8 to 20.
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European Focus List Update:
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Actionable names include Bae Systems (BA.GB; BA/LN), Bridgepoint Grp (BPT.GB; BPT LN), Recordati Indua.Chimica (REC.IT; REC IM), Siegfried ‘R’ (SFZN.CH; SFZN SW), Ypsomed Holding (YPSN.CH; YPSN SW), Inditex (IND.ES; ITX SM), Munters Group (MUGR.SE), Universal Music Group (UNMG.NL; UMG NA), Trigano (TRI.FR; TRI FP), VAT Group (VACN.CH; VACN SW), Novo Nordisk (NON.DK; NOVOB DC), and Beiersdorf (Xet) (BEIX.DE; BEI GR).
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Addition: None
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Removal: None
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Won Europe Today
Yesterday,
- European markets had another weak session as indices continued to consolidate after facing resistance at their
near-term key moving averages. We recommend that investors add risk in stocks that are coming out of proper
bases in leading industry groups and trim extended positions. - The Stoxx 600 declined 0.5%. The index is now facing resistance at its declining 21-DMA. Among other major
indices, France’s CAC 40 was facing resistance at its declining 10-DMA, while Germany’s DAX faced resistance at
its declining 21-DMA. The U.K.’s FTSE 100 was testing its key support level of 7,600. - Among sectors, Basic Resources and Retail were down 1% each. Banks and Health Care declined 70bps and
60bps, respectively. On the other hand, Travel & Leisure gained 1% and Telecom rose 0.5%. - Among the 16 indices that we track, only Austria and Ireland closed in the green. Sweden recorded its fifth
distribution day. - Actionable names in the Focus List include Bridgepoint Group (BPT.GB; BPT:LN), Bae Systems (BA.GB; BA/:LN),
Inditex (IND.ES; ITX:SM), Nemetschek (NEMX.DE; NEM:GR), Recordati (REC.IT; REC:IM), Siegfried (SFZN.CH;
SFZN:SW), and Trigano (TRI.FR; TRI:FP).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 bounced off support at its 21-DMA (4,724) and is retesting 52-
week highs (4,793). The Nasdaq held above price support (14,446) at the top of the prior base consolidation, which coincides with July
highs and has regained its 21-DMA (14,770). The distribution day count stands at five and three, respectively.
Consumer Discretionary
Key points:
- We still recommend underweighting the European Luxury sector. Key macro indicators along with poor earnings momentum suggest further downside risk.
- After bouncing from November’s bottom led by the year end market rally, the sector rapidly rolled over in the second half of December, significantly underperforming the general market. Several stocks hit fresh 52-week lows.
Won Europe Today
On Friday,
- European markets rebounded after three consecutive days of decline. Among the 16 indices we track, only
Portugal closed in negative territory. We recommend that investors add risk in stocks that are coming out of proper
bases in leading industry groups. - The Stoxx 600 was up 0.8% on low volume and was facing resistance at its declining 10-DMA. It found support at
472. Among other major indices, France’s CAC 40 was facing resistance at its declining 10-DMA. Germany’s DAX
30 and the U.K.’s FTSE 100 faced resistance at their respective 21-DMA. - Among sectors, Technology and Construction & Material gained more than 1% each. Retail gained 1.5%. Travel &
Leisure was flat, while Auto declined more than 1%. - Actionable names in the Focus List include Bridgepoint Group (BPT.GB; BPT:LN), Bae Systems (BA.GB; BA/:LN),
Inditex (IND.ES; ITX:SM), Nemetschek (NEMX.DE; NEM:GR), Recordati (REC.IT; REC:IM), Siegfried (SFZN.CH;
SFZN:SW), and Trigano (TRI.FR; TRI:FP).
Won Europe Today
We released our Weekly Global Laggards Report today. Click here to access the report. The stocks highlighted in this
report are laggards relative to their own domestic markets. We recommend that they be underweighted as they may be
vulnerable to further downside risk and underperformance. Stocks in Europe include David Campari Milano (CPR.IT;
CPR:IM) and Scor Se (SCO.FR; SCR:FP).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq ended a volatile session flat. On the
downside, support for the indices is at their respective 10-DMA (4,750/14,812), followed by the July 2023 high (4,607/14,841). The
distribution day count stands at five and three, respectively.
Won Europe Today
Yesterday,
- European markets continued to be tentative, declining for the second consecutive session ahead of the U.S.
inflation print later today. Investors are closely monitoring the data to gauge whether the central banks will be able to
execute the price cuts. The market expects 50% chance of a rate cut in March, with the cut fully priced in by April,
and more than two cuts by June. - The Stoxx 600 declined 18bps to close at its 21-DMA.The index is expected to consolidate between 482 and 472
until we get a clear indication following the U.S. CPI print on Thursday. It remains extended from its key support
levels (50-, 100-, and 200-DMA). We recommend that investors book profits in extended names. Be selective in
adding top-rated names that are breaking out of proper bases and wait for the rising 50-DMA to catch up. - Sectoral performance was weak. Mining, Travel, and Oil and Gas lagged the most, declining 111bps, 109bps, and
108bps, respectively. - Among the three major indices, France’s CAC 40 and the U.K.’s FTSE 100 closed in the red. Germany’s
DAX ended flat with a positive bias, inching up 1bps. The CAC continued to face overhead resistance at its
converging 10- and 21-DMA. The DAX was running into resistance at its rising 21-DMA. The FTSE was testing
support at its 21-DMA. - Of the 16 indices we track, six had a positive session, while the remaining 10 closed in the red. With three indices
recording a distribution day each, the average distribution day count stood at 3.4. - Actionable names in the Focus List are Adidas (ADSX.DE; ADS:GR), Bae Systems (BA.GB; BA/:LN), Inditex
(IND.ES; ITX:SM), Nemetschek (NEMX.DE; NEM:GR), Recordati (REC.IT; REC:IM), Siegfried (SFZN.CH;
SFZN:SW), and Trigano (TRI.FR; TRI:FP).
Won Global View
The U.S. market remains in an Uptrend Under Pressure. The S&P 500 and Nasdaq gained 56–75bps yesterday. We will shift both
indices to a Confirmed Uptrend on fresh 52-week highs. On the downside, support for the indices is at their respective 10-DMA
(4,743/14,812), followed by the July 2023 high (4,607/14,447). The distribution day count stands at six and three, respectively, with one
expiring on the S&P 500 today after close.
